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Nvidia Moves Lower As Investors Brace for Earnings: What To Expect

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Shares of Nvidia (NVDA - Free Report) opened higher—but quickly dipped into the red—on Thursday morning, just hours before the popular graphics chip manufacturer is scheduled to release its latest quarterly financial results.

Nvidia’s dip contrasted broader gains in U.S. stocks, which were lifted by strong earnings results from the likes of Walmart (WMT - Free Report) and news that the U.S. and China will resume trade talks later this month. Expectations are always high when Nvidia reports as Wall Street looks for the trendy growth company to maintain its rapid expansion, and it looks like investors are displaying some hesitation this morning.

But Nvidia is almost certainly prepared to report another quarter of remarkable results. Will it be enough to get the stock soaring once again? Let’s check in with our latest estimates to gauge where expectations lie right now.

NVIDIA Corporation Price, Consensus and EPS Surprise

NVIDIA Corporation Price, Consensus and EPS Surprise | NVIDIA Corporation Quote

Earnings Outlook

Nvidia will release its second quarter fiscal 2019 earnings results after the market closes today. Here’s what analysts are expecting, according to our Zacks Consensus Estimates.

Earnings: Nvidia is projected to post adjusted earnings of $1.83 per share. This would represent year-over-year growth of 81.2%.

Estimate Revisions: Nvidia has not witnessed any earnings estimate revisions for the soon-to-be-reported quarter within the past 60 days. Our consensus earnings estimate has remained stagnant over that time.

Revenue: Consensus estimates have Nvidia’s Q2 revenue pegged at $3.11 billion. This would mark growth of 39.3% from the year-ago period.

Valuation

Nvidia is trading at about 31.5x forward 12-month earnings heading into the report. This is a steep premium compared to the industry’s average of 16.2x. Over the past year, Nvidia has traded as high as 57.4x and has a median earnings multiple of 41.0x.

Bottom Line

Nvidia shares have been on an up-and-down ride over the past five days, but the stock moving lower amid market-wide gains just ahead of its report suggests some investors are worried the company will not be able to live up to sky-high expectations.

With that said, the stock is now trading with its lowest forward earnings multiple in the past year and might have just gone on sale ahead of its earnings announcement. Make sure to check back here when Nvidia reports later!

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